Kenya and Tanzania sign deal to build Dar es Salaam -Mombasa LNG pipeline

KENYA – The governments of Kenya and Tanzania have signed a deal to build a liquefied natural gas (LNG) pipeline from Dar es Salaam to Mombasa that will be used for power generation and possibly for cooking as well as heating.

President Uhuru Kenyatta and his Tanzanian counterpart Samia Suluhu announced at a press conference in Nairobi that the project would be part of a long-term plan to expand infrastructure between the two countries.

President Suluhu said respective government officials had been instructed to commence works on the project immediately.

“That is a long-term project…we are thankful that today we have signed an agreement… what remains is implementation,” she said.

“We have agreed on the need to ease the transportation of key energy resources and have reached one such understanding on the transportation of gas. What we need to do now is start implementing the project,” she added.

The two leaders did not give timelines, but the Memorandum of Understanding on Cooperation in Natural Gas Transportation means the countries’ Energy ministries could start negotiating the design, cost and other logistics needs for the pipeline.

“We have agreed on ways of tapping Tanzania’s natural gas,” said President Kenyatta.

The LNG project comes a decade later after initial plans, which valued the pipeline at US$587 million, failed to take off.

In 2011, Kenya announced plans to build US$500 million LNG terminal at the port city of Mombasa to diversify sources of electricity to meet rising demand.

“That is a long-term project…we are thankful that today we have signed an agreement… what remains is implementation”

Samia Suluhu – President, Tanzania

An East African Community study at the time showed that a pipeline to move natural gas from Dar es Salaam to the terminal would cost up US$630.

Tanzania has so far discovered more than 57 trillion cubic feet of natural gas and is engaging international oil firms on the terms of developing a US$30-billion LNG project.

Tanzania has said it plans to export surplus electricity to energy-starved nations in eastern and southern Africa once it has boosted its generation capacity.

Foreign oil and gas companies Equinor, alongside Royal Dutch Shell, Exxon Mobil and Ophir Energy and Pavilion Energy, plan to build the onshore LNG plant in Lindi region.

The international oil companies will develop the project in partnership with the state-run Tanzania Petroleum Development Corporation.

In April of 2021, the government of Tanzania announced it is looking to seal a US$30 billion liquefied natural gas (LNG) project within six months, after President Samia Suluhu called for a resumption of negotiations that had stalled for more than a year.

One of the developers, Equinor ASA, took a US$982 million impairment on the project in January 2021, which it said would be reversible, after failing to settle terms with Tanzania’s government.

In 2019, Tanzania’s Liquefied Natural Gas (LNG) project was put on hold after the suspension of talks between the government and foreign investors who were seeking to review the sharing agreements.

The discussions were suspended due to concerns of massive tax evasion, unfair contracts, and manipulation by companies to decrease payments to the government.

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